The Future of the Financial Advisor Surviving a multichannel world

By Steve Maguire, Head of Financial Services at North Highland, a global management consultancy

The increasing amounts of data available today means that clients are looking for more from financial advisors (FAs) in wealth management. The convergence of the internet and consumer technology means that investors are better educated and more equipped than ever before. They no longer need to invest via a financial advisor, they can make the transaction themselves online, on their mobiles, or via their tablet. They are instead looking for an integrated, value-added service that goes beyond the traditional role of the financial advisor.

Moreover, the Retail Distribution Review (RDR) conducted by the FSA as part of its consumer protection strategy, is seeking to restore consumer confidence and trust in financial advisors. The RDR will shift the focus away from ‘which product’ to ‘which service’ and bring more clarity to how FAs are remunerated. The pressure on FAs to justify their fees and offer more value is bringing (some would say) a healthy challenge to the sector. So how should FAs adapt to survive?

Getting on board with consumer technology
The tablet revolution means everyone wants a “cool looking” data visualisation front end to manipulate data in more interesting and useful ways. In 2012, Forester Research forecasted that more than 112M people in the US and 106M in Western Europe will own tablets by 2016. This means that tablets – and the tools they offer – are becoming a way of life for customers. For example, clients today want to see goal-based planning rather than just a simple view of their portfolio. Offering interactive tools is essential because in a world of comparison websites, clients don’t just want one point of view on their investment; they want several recommendations, as they have the resources and education to question and test advice.

Consequently, the financial advisors who are integrating interactive tools into their offer are proving to be more successful; they can demonstrate that they are keeping up with the times and show the value of their service rather than sourcing lucrative fee driven products. Unsurprisingly, Forester analysts are encouraging financial institutions to make tablets an important part of their digital strategy.

Embracing social media
Implementing a successful social media strategy at the brand level for financial services firms is becoming increasingly important as clients demand deeper relationships with their financial institutions. We are seeing more and more financial advisors recognize the benefits of social media. Firms are using it as a recruiting tool to source talent from competitors. The flexible nature of social media platforms means that financial advisors can integrate social strategies into their unique business models. Information provided by financial advisors and clients through social media also allows for product and service level innovation.

While there are clear benefits to using social media, FAs should not expect clients or prospects to initiate deep conversations about financial goals and lifelong dreams via it. That is still the role of face-to-face meetings, value added advice and insightful tools. But it does provide FAs with an opportunity to remind those on the fringes of their circle of influence that they can help when the time is right. Clients are researching advisors on social media to supplement their financial education and connect personally with FAs. Because of those expectations, FAs who maintain a professional social media presence will ultimately acquire more clients, and more assets from current clients.

Of course, social media can only accentuate the effective FAs who already do a good job of creating those relationships. Instead of viewing social sites as a panacea to solve the relationship conundrum with clients, FAs should be using social media in ways that amplify the activities they are already doing. However, the power of social media means that there is no place to hide if services are not up to scratch.

Getting your business structure right
A successful digital strategy is dependent on having the right company structure in place to embrace a multi-channel world. For some wealth management companies, there are tough operational obstacles to overcome as they look to converge online, call centre, and face-to-face channels. These challenges are because many of the traditional trading houses have grown through M&A. For example, the call centre and the financial advisory will have behaved and been treated as separate entities, developing their own bespoke technology systems internally. In order to converge, some companies will need to consolidate as many as 60 platforms to one. Consequently, there is a huge data and system architecture requirement to achieve the holy grail of a “single view” of a customer.

To achieve this, some financial advisors need to unwind their existing technologies. This needs to have a long term strategy as often, many of the technologies they have deployed are both large and expensive – sometimes costing up to tens of millions of pounds to unwind. While this happens, companies need a short term solution – they still need to adopt a multi-channel approach in order to avoid losing market share. First steps are to re-orient the business along service lines rather than product types. By understanding the key interactions where clients take key decisions or make defining choices, provides companies with view of the important ‘hot spots’ in any given customers experience or journey. These hot spots are the priority areas to target improvements in the business operating model. Investing millions in new call centre technology is only as good as the data that dictates the customer experience.

It is clear that multi-channel is not going away. The firms and FAs that embrace it will develop a competitive advantage that enables them to break away from the offering of their peer group. Being successful in multi-channel requires a thoughtful implementation strategy – companies shouldn’t just jump into the deep end – but taking on this brave new world will mean FAs can position themselves at the cutting edge of new, value added services that satisfy the much savvier breed of client that exists today – and crucially – ensure their survival.